No more borrowing, says Jaitley and talks of cuts in spending

Finance minister Arun Jaitley does not believe in living on borrowed money. This means the government will not overshoot limits imposed on fiscal deficit.

However, to maintain 4.1% fiscal deficit target the government is planning to reduce its spending. "We're trying to rationalise expenditure as far as the government is concerned because we do not want the government to live on borrowed money indefinitely," Jaitley told a gathering of industrialists and planners gathered at Mumbai on Friday.

"The whole concept of spending beyond your means and leaving the next generation in debt to repay what we are overspending today is never prudent fiscal policy," he said. The finance minister was addressing a gathering of top industrialists and planners through video conferencing at an event — ‘Mumbai First: Turning the city into an international finance hub’

These spending cuts would be over and above 10% that the government has already announced to meet the budgeted 4.1% fiscal deficit target. In fact the target has already been breached in November itself -- four months ahead of the end of the financial year on March 31.

As he hits the budget month, Jaitley spoke of a stable tax regime. “Our taxation policy was not exactly investor friendly. In the last few months, we’ve made a huge effort to smoothen tax disputes and those issues which were bringing the Indian revenue structure a bad name.

“I’ve always believed that where taxes are to be paid, taxes will be collected, but no unfair effort will be made by the state so that investors are unnecessarily harassed in that area,” he said.

On reforms, he said power, energy, railways and ports will be high on priority for the government and hinted at more public investment into these sectors.

And how these areas will get funds? Jaitley spoke of international financing models to fund investment in priority areas.

“I think the international models of inviting finance, which is internationally available from various sources, is extremely important.

“In the last few weeks we have had a series of visitors who showed a great amount of interest in financing our infrastructure if a particular model can be created. I cannot go into details of these models, but these are under active consideration of the government and you will see soon hear from us,” Jaitley added.

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